Fund fees and charges yourself

Don’t borrow more to pay charges!

Try to cover any fees and charges from your pocket rather than letting the balance of your loan increase as charges are added.

As charges are added and your loan amount increase you are essentially borrowing the money to pay the fees which means that you will be charged interest on those fees. The lenders essentially double dip, by 1) charging you fees and 2) charging you interest on those fees.

To combat paying this additional interest try to fund the fees yourself, by making additional payments which match the fees/charges.

If you have an annual account keeping fee of $300 added to/taken away from your balance on the anniversary of your loan, try to pay an extra $300 off your loan during the same month. 

If you have a monthly fee on your home loan account set up a recurring payment cover the fees – if the lender adds a fee of $10 on the 1st of each month, set up a recurring overpayment of $10 per month to coincide with the charge. You could try making your payment $15 per month. That way you will cover the fees and be paying off an additional $5 per month off your loan. You’re not likely to miss the additional $5 per month!

But most importantly – cover any fees/charges by making extra corresponding repayments as the fees/charges are applied to your home loan.

Do this as well as making any other overpayment.  Do not be tempted to think - "It's OK, I'm paying an extra $50 per month anyway so that covers the fees" - make an effort to pay the fees as well.

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